SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 11-K
-------------
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number 1-8608
-------------
NYNEX Corporation Savings Plan
for Salaried Employees
-------------
NYNEX Corporation
1095 Avenue of the Americas, New York, New York 10036
<PAGE>
Item 1. Financial Statements and Exhibits.
(a) Financial Statements of the Plan* included herein:
Report of Independent Accountants
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of
December 31, 1996 and 1995
Statements of Changes in Net Assets Available for Plan Benefits
for the Years Ended December 31, 1996 and 1995
Notes to Financial Statements
(b) Exhibits:
(23) Consent of Coopers & Lybrand L.L.P.
- ----------
* This and certain other capitalized terms used but not defined herein shall
have their respective meanings as defined in the Plan Prospectus.
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Employees' Benefit Committee
of NYNEX Corporation:
We have audited the Statements of Net Assets Available for Plan Benefits of the
NYNEX Corporation Savings Plan for Salaried Employees as of December 31, 1996
and 1995, and the related Statements of Changes in Net Assets Available for Plan
Benefits for each of the two years in the period ended December 31, 1996. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the NYNEX
Corporation Savings Plan for Salaried Employees as of December 31, 1996 and 1995
and the changes in net assets available for plan benefits for each of the two
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Fund Information in the Statements of
Net Assets Available for Plan Benefits as of December 31, 1996 and 1995 and the
Statements of Changes in Net Assets Available for Plan Benefits for each of the
two years in the period ended December 31, 1996 is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund. The
Fund Information has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken as
a whole.
COOPERS & LYBRAND L.L.P.
New York, New York
June 20, 1997
3
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits
December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
--------------------------------------------------------------------------
NYNEX Diversified Interest
Shares Telecommunications Government Equity Income
Fund Fund Obligations Fund Portfolio Fund
---- ---- ---------------- --------- ----
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at market (see Notes 2 and 3)
Allocated Share of Master Trust net assets $622,838 $155,919 $116,553 $767,040 $786,005
Temporary cash investments -- -- -- 1,376 --
NYNEX Corporation common stock -- -- -- -- --
Receivable for loans to participants -- -- -- -- --
--------------------------------------------------------------------------
Total Investments 622,838 155,919 116,553 768,416 786,005
Dividends and interest receivable -- -- -- 15 --
--------------------------------------------------------------------------
Total Assets 622,838 155,919 116,553 768,431 786,005
LIABILITIES
Note payable (Note 7) -- -- -- -- --
--------------------------------------------------------------------------
Total Liabilities -- -- -- -- --
--------------------------------------------------------------------------
Net Assets Available for Plan Benefits
(Notes 1 and 2) $622,838 $155,919 $116,553 $768,431 $786,005
==========================================================================
</TABLE>
See notes to financial statements.
4
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits (Continued)
December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------------------------------
Employee Stock Active U.S. U.S.
Loan Ownership Plan Equity Balanced
Fund Allocated Unallocated Fund Fund
---- --------- ----------- ---- ----
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at market (see Notes 2 and 3)
Allocated Share of Master Trust net assets $ -- $291,677 $ -- $57,715 $37,237
Temporary cash investments -- -- -- 103 72
NYNEX Corporation common shares -- -- 388,855 -- --
Receivable for loans to participants 85,863 -- -- -- --
-------------------------------------------------------------------
Total Investments 85,863 291,677 388,855 57,818 37,309
Dividends and interest receivable -- -- -- 1 1
-------------------------------------------------------------------
Total Assets 85,863 291,677 388,855 57,819 37,310
LIABILITIES
Note payable (Note 7) -- -- 399,454 -- --
-------------------------------------------------------------------
Total Liabilities -- -- 399,454 -- --
-------------------------------------------------------------------
Net Assets Available for Plan Benefits
(Notes 1 and 2) $85,863 $291,677 ($10,599) $57,819 $37,310
===================================================================
</TABLE>
See notes to financial statements.
5
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits (Continued)
December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------
Global International
Balanced Equity U.S. Small
Fund Fund Cap Fund Total
---- ---- -------- -----
<S> <C> <C> <C> <C>
ASSETS
Investments at market (see Notes 2 and 3)
Allocated Share of Master Trust net assets $35,365 $33,288 $44,422 $2,948,059
Temporary cash investments 62 58 79 1,750
NYNEX Corporation common shares -- -- -- 388,855
Receivable for loans to participants -- -- -- 85,863
--------------------------------------------------------------
Total Investments 35,427 33,346 44,501 3,424,527
Dividends and interest receivable 1 1 1 20
--------------------------------------------------------------
Total Assets 35,428 33,347 44,502 3,424,547
LIABILITIES
Note payable (Note 7) -- -- -- 399,454
--------------------------------------------------------------
Total Liabilities -- -- -- 399,454
--------------------------------------------------------------
Net Assets Available for Plan Benefits
(Notes 1 and 2) $35,428 $33,347 $44,502 $3,025,093
==============================================================
</TABLE>
See notes to financial statements.
6
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits
December 31, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
---------------------------------------------------------------------------
NYNEX Diversified Interest
Shares Telecommunications Government Equity Income
Fund Fund Obligations Fund Portfolio Fund
---- ---- ---------------- --------- ----
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at market (see Notes 2 and 3)
NYNEX Corporation common shares $ 708,150 $ 8,565 $ -- $ -- $ --
Government Obligations pooled fund -- -- 128,745 -- --
Contracts with insurance companies
and other financial institutions -- -- -- -- 811,786
Telecommunications Fund common shares,
excluding NYNEX Corporation common shares -- 157,087 -- -- --
Value of Plan's participation in
Master Trust (Note 3) -- -- -- 595,733 --
Temporary cash investments 4,978 1,238 -- -- 6,380
Receivable for loans to participants -- -- -- -- --
---------------------------------------------------------------------------
Total Investments 713,128 166,890 128,745 595,733 818,166
Allotments and contributions receivable (Note 1) (149) 16 (96) 184 (208)
InterFund, interPlan and other
transfers receivable - net -- 545 -- 562 --
Dividends and interest receivable 27 652 -- -- --
Other receivables 97 36 -- 24 143
---------------------------------------------------------------------------
Total Assets 713,103 168,139 128,649 596,503 818,101
LIABILITIES
Expenses payable & other payables 37 9 6 40 45
InterFund, interPlan and other transfers payable - net 856 -- 18 -- 572
Payable for securities purchased -- 166 -- -- --
Note payable (Note 7) -- -- -- -- --
Accrued interest on note payable -- -- -- -- --
---------------------------------------------------------------------------
Total Liabilities 893 175 24 40 617
---------------------------------------------------------------------------
Net Assets Available for Plan Benefits
(Notes 1 and 2) $ 712,210 $167,964 $ 128,625 $596,463 $ 817,484
===========================================================================
</TABLE>
See notes to financial statements.
7
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits (Continued)
December 31, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------------------------
Employee Stock Active U.S. U.S.
Loan Ownership Plan Equity Balanced
Fund Allocated Unallocated Fund Fund
---- --------- ----------- ---- ----
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at market (see Notes 2 and 3)
NYNEX Corporation common shares $ -- $286,243 $464,843 $ -- $ --
Government Obligations pooled fund -- -- -- -- --
Contracts with insurance companies
and other financial institutions -- -- -- -- --
Telecommunications Fund common shares,
excluding NYNEX Corporation common shares -- -- -- -- --
Value of Plan's participation in
Master Trust (Note 3) -- -- -- 32,077 24,194
Temporary cash investments -- 1,670 24 -- --
Receivable for loans to participants 82,556 -- -- -- --
-------------------------------------------------------------
Total Investments 82,556 287,913 464,867 32,077 24,194
Allotments and contributions receivable (Note 1) -- 96 -- 23 16
InterFund, interPlan and other
transfers receivable - net -- -- -- 62 --
Dividends and interest receivable -- 6 -- -- --
Other receivables -- -- -- 1 --
-------------------------------------------------------------
Total Assets 82,556 288,015 464,867 32,163 24,210
LIABILITIES
Expenses payable & other payables -- 29 -- 30 26
InterFund, interPlan and other transfers payable - net -- -- -- -- 63
Payable for securities purchased -- -- -- -- --
Note payable (Note 7) -- -- 414,079 -- --
Accrued interest on note payable -- -- 7,244 -- --
-------------------------------------------------------------
Total Liabilities -- 29 421,323 30 89
-------------------------------------------------------------
Net Assets Available for Plan Benefits
(Notes 1 and 2) $82,556 $287,986 $ 43,544 $32,133 $24,121
=============================================================
</TABLE>
See notes to financial statements.
8
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Net Assets Available for Plan Benefits (Continued)
December 31, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
------------------------------------------
Global International
Balanced Equity U.S. Small
Fund Fund Cap Fund Total
---- ---- -------- -----
<S> <C> <C> <C> <C>
ASSETS
Investments at market (see Notes 2 and 3)
NYNEX Corporation common shares $ -- $ -- $ -- $ 1,467,801
Government Obligations pooled fund -- -- -- 128,745
Contracts with insurance companies
and other financial institutions -- -- -- 811,786
Telecommunications Fund common shares,
excluding NYNEX Corporation common shares -- -- -- 157,087
Value of Plan's participation in
Master Trust (Note 3) 19,796 22,087 27,798 721,685
Temporary cash investments -- -- -- 14,290
Receivable for loans to participants -- -- -- 82,556
-------------------------------------------------------------
Total Investments 19,796 22,087 27,798 3,383,950
Allotments and contributions receivable (Note 1) 16 25 30 (47)
InterFund, interPlan and other
transfers receivable - net 119 -- 246 1,534
Dividends and interest receivable -- -- -- 685
Other receivables -- 1 -- 302
-------------------------------------------------------------
Total Assets 19,931 22,113 28,074 3,386,424
LIABILITIES
Expenses payable & other payables 25 25 76 348
InterFund, interPlan and other transfers payable - net -- 85 -- 1,594
Payable for securities purchased -- -- -- 166
Note payable (Note 7) -- -- -- 414,079
Accrued interest on note payable -- -- -- 7,244
-------------------------------------------------------------
Total Liabilities 25 110 76 423,431
-------------------------------------------------------------
Net Assets Available for Plan Benefits
(Notes 1 and 2) $19,906 $22,003 $27,998 $ 2,962,993
=============================================================
</TABLE>
See notes to financial statements.
9
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits
December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------------------------------------
NYNEX Diversified Interest
Shares Telecommunications Government Equity Income
Fund Fund Obligations Fund Portfolio Fund
---- ---- ---------------- --------- ----
<S> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions, Allocations and Transfers:
Employee allotments $ 21,079 $ 3,062 $ 2,701 $ 34,312 $ 19,831
Interfund Transfers (8,757) (5,735) (8,789) 15,247 (35,288)
Employing company contributions (Note 1) 1,766 131 239 1,841 2,074
Allocation of shares to participants -- -- -- -- --
Supplemental contributions -- -- -- -- --
Loans to participants, net of transfers of
participants' balances (10,519) (799) (1,001) (10,986) (9,082)
Transfer for loan repayment 9,869 1,264 1,133 13,024 8,225
-------------------------------------------------------------------------
Total allotments, contributions,
allocations and transfers 13,438 (2,077) (5,717) 53,438 (14,240)
Investment Income:
Allocated share of Master Trust
investment activities (Note 3) (52,183) 2,070 4,324 164,818 50,535
-------------------------------------------------------------------------
Total additions (38,745) (7) (1,393) 218,256 36,295
-------------------------------------------------------------------------
Deductions:
Administrative expenses 182 55 113 180 227
Distributions to participants 50,445 11,983 10,566 46,108 67,547
Interest on note -- -- -- -- --
-------------------------------------------------------------------------
Total deductions 50,627 12,038 10,679 46,288 67,774
-------------------------------------------------------------------------
Net (decrease) increase (89,372) (12,045) (12,072) 171,968 (31,479)
Net Assets Available for Plan Benefits:
Beginning of year - January 1, 1996 712,210 167,964 128,625 596,463 817,484
-------------------------------------------------------------------------
End of year - December 31, 1996 (Notes 2 and 3) $ 622,838 $ 155,919 $ 116,553 $ 768,431 $ 786,005
==========================================================================
</TABLE>
See notes to financial statements.
10
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits(Continued)
December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
----------------------------------------------------------------------
Employee Stock Active U.S. U.S.
Loan Ownership Plan Equity Balanced
Fund Allocated Unallocated Fund Fund
---- --------- ----------- ---- ----
<S> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions, Allocations and Transfers:
Employee allotments $ -- $ -- $ -- $ 3,979 $ 2,099
Interfund Transfers -- (2,168) -- 14,663 8,049
Employing company contributions (Note 1) -- 16,609 -- 177 108
Allocation of shares to participants -- 19,836 (19,836) -- --
Supplemental contributions -- -- 26,530 -- --
Loans to participants, net of transfers of
participants' balances 35,507 (408) -- (714) (334)
Transfer for loan repayment (38,054) -- -- 1,200 602
----------------------------------------------------------------------
Total allotments, contributions,
allocations and transfers (2,547) 33,869 6,694 19,305 10,524
Investment Income:
Allocated share of Master Trust
investment activities (Note 3) 5,854 (17,904) (21,307) 9,312 4,697
----------------------------------------------------------------------
Total additions 3,307 15,965 (14,613) 28,617 15,221
----------------------------------------------------------------------
Deductions:
Administrative expenses -- 84 -- 99 78
Distributions to participants -- 12,190 -- 2,832 1,954
Interest on note -- -- 39,530 -- --
----------------------------------------------------------------------
Total deductions -- 12,274 39,530 2,931 2,032
----------------------------------------------------------------------
Net (decrease) increase 3,307 3,691 (54,143) 25,686 13,189
Net Assets Available for Plan Benefits:
Beginning of year - January 1, 1996 82,556 287,986 43,544 32,133 24,121
----------------------------------------------------------------------
End of year - December 31, 1996 (Notes 2 and 3) $ 85,863 $ 291,677 ($10,599) $ 57,819 $ 37,310
======================================================================
</TABLE>
See notes to financial statements.
11
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits (Continued)
December 31, 1996
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-------------------------------------------
Global International
Balanced Equity U.S. Small
Fund Fund Cap Fund Total
---- ---- -------- -----
<S> <C> <C> <C> <C>
Additions:
Allotments, Contributions, Allocations and Transfers:
Employee allotments $ 2,361 $ 2,829 $ 3,812 $ 96,065
Interfund Transfers 10,279 5,768 6,731 --
Employing company contributions (Note 1) 112 111 158 23,326
Allocation of shares to participants -- -- -- --
Supplemental contributions -- -- -- 26,530
Loans to participants, net of transfers of
participants' balances (437) (620) (607) --
Transfer for loan repayment 753 951 1,220 187
--------------------------------------------------------------
Total allotments, contributions,
allocations and transfers 13,068 9,039 11,314 146,108
Investment Income:
Allocated share of Master Trust
investment activities (Note 3) 4,300 3,562 7,421 165,499
--------------------------------------------------------------
Total additions 17,368 12,601 18,735 311,607
--------------------------------------------------------------
Deductions:
Administrative expenses 77 106 248 1,449
Distributions to participants 1,769 1,151 1,983 208,528
Interest on note -- -- -- 39,530
--------------------------------------------------------------
Total deductions 1,846 1,257 2,231 249,507
--------------------------------------------------------------
Net (decrease) increase 15,522 11,344 16,504 62,100
Net Assets Available for Plan Benefits:
Beginning of year - January 1, 1996 19,906 22,003 27,998 2,962,993
--------------------------------------------------------------
End of year - December 31, 1996 (Notes 2 and 3) $ 35,428 $ 33,347 $ 44,502 $3,025,093
==============================================================
</TABLE>
See notes to financial statements.
12
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits
December 31, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
------------------------------------------------------------------------
NYNEX Diversified Interest
Shares Telecommunications Government Equity Income
Fund Fund Obligations Portfolio Fund
---- ---- ----------- --------- ----
<S> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions, Allocations and Transfers:
Employee allotments $ 22,355 $ 667 $ 3,188 $ 33,213 $ 31,365
Employing company contributions (Note 1) 1,163 37 468 2,173 3,025
Allocation of shares to participants -- -- -- -- --
Supplemental contributions -- -- -- -- --
Loans to participants, net of transfers of
participants' balances (84,787) (8,970) (8,739) 10,747 (13,340)
Transfer for loan repayment -- -- -- -- --
------------------------------------------------------------------------
Total allotments, contributions,
allocations and transfers (61,269) (8,266) (5,083) 46,133 21,050
Investment Income:
Dividends on NYNEX Corporation common shares 24,548 238 -- -- --
Other dividends -- 5,126 -- -- --
Interest 230 65 -- -- 55,049
Net appreciation in the fair value of investments 233,978 44,350 13,245 -- --
Allocated share of Master Trust
investment activities (Note 3) -- -- -- 155,917 --
------------------------------------------------------------------------
Total additions 197,487 41,513 8,162 202,050 76,099
------------------------------------------------------------------------
Deductions:
Administrative expenses 108 39 114 108 147
Distributions to participants 53,921 13,265 11,312 31,381 69,271
Interest on note -- -- -- -- --
------------------------------------------------------------------------
Total deductions 54,029 13,304 11,426 31,489 69,418
------------------------------------------------------------------------
Net increase (decrease) 143,458 28,209 (3,264) 170,561 6,681
Net Assets Available for Plan Benefits:
Beginning of year - January 1, 1995 568,752 139,755 131,889 425,902 810,803
------------------------------------------------------------------------
End of year - December 31, 1995 (Notes 2 and 3) $ 712,210 $ 167,964 $ 128,625 $596,463 $ 817,484
=======================================================================
</TABLE>
See notes to financial statements.
13
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits(Continued)
December 31, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------
Employee Stock Active U.S. U.S.
Loan Ownership Plan Equity Balanced
Fund Allocated Unallocated Fund Fund
---- --------- ----------- ---- ----
<S> <C> <C> <C> <C> <C>
Additions:
Allotments, Contributions, Allocations and Transfers:
Employee allotments $ -- $ -- $ -- $ 2,341 $ 1,289
Employing company contributions (Note 1) -- 19,971 -- 126 80
Allocation of shares to participants -- 20,392 (20,392) -- --
Supplemental contributions -- -- 25,887 -- --
Loans to participants, net of transfers of
participants' balances 4,744 (931) -- 25,271 20,046
Transfer for loan repayment -- (4,858) 4,858 -- --
-----------------------------------------------------------------
Total allotments, contributions,
allocations and transfers 4,744 34,574 10,353 27,738 21,415
Investment Income:
Dividends on NYNEX Corporation common shares -- 8,904 15,640 -- --
Other dividends -- -- -- -- --
Interest -- 111 4 -- --
Net appreciation in the fair value of investments -- 88,370 150,116 -- --
Allocated share of Master Trust
investment activities (Note 3) -- -- -- 5,827 3,410
-----------------------------------------------------------------
Total additions 4,744 131,959 176,113 33,565 24,825
-----------------------------------------------------------------
Deductions:
Administrative expenses -- 61 -- 73 73
Distributions to participants -- 15,157 -- 1,359 631
Interest on note -- -- 38,635 -- --
-----------------------------------------------------------------
Total deductions -- 15,218 38,635 1,432 704
-----------------------------------------------------------------
Net increase (decrease) 4,744 116,741 137,478 32,133 24,121
Net Assets Available for Plan Benefits:
Beginning of year - January 1, 1995 77,812 171,245 (93,934) -- --
-----------------------------------------------------------------
End of year - December 31, 1995 (Notes 2 and 3) $82,556 $ 287,986 $ 43,544 $32,133 $24,121
=================================================================
</TABLE>
See notes to financial statements.
14
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
Statement of Changes in Net Assets Available for Plan Benefits (Continued)
December 31, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------
Global International
Balanced Equity U.S. Small
Fund Fund Cap Fund Total
---- ---- -------- -----
<S> <C> <C> <C> <C>
Additions:
Allotments, Contributions, Allocations and Transfers:
Employee allotments $ 1,598 $ 2,590 $ 2,494 $ 101,100
Employing company contributions (Note 1) 87 116 131 27,377
Allocation of shares to participants -- -- -- --
Supplemental contributions -- -- -- 25,887
Loans to participants, net of transfers of
participants' balances 15,846 18,776 24,043 2,706
Transfer for loan repayment -- -- -- --
-----------------------------------------------------------
Total allotments, contributions,
allocations and transfers 17,531 21,482 26,668 157,070
Investment Income:
Dividends on NYNEX Corporation common shares -- -- -- 49,330
Other dividends -- -- -- 5,126
Interest -- -- -- 55,459
Net appreciation in the fair value of investments -- -- -- 530,059
Allocated share of Master Trust
investment activities (Note 3) 3,185 1,412 2,516 172,267
-----------------------------------------------------------
Total additions 20,716 22,894 29,184 969,311
-----------------------------------------------------------
Deductions:
Administrative expenses 68 54 178 1,023
Distributions to participants 742 837 1,008 198,884
Interest on note -- -- -- 38,635
-----------------------------------------------------------
Total deductions 810 891 1,186 238,542
-----------------------------------------------------------
Net increase (decrease) 19,906 22,003 27,998 730,769
Net Assets Available for Plan Benefits:
Beginning of year - January 1, 1995 -- -- -- 2,232,224
-----------------------------------------------------------
End of year - December 31, 1995 (Notes 2 and 3) $19,906 $22,003 $27,998 $2,962,993
===========================================================
</TABLE>
See notes to financial statements.
15
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
(Dollars in Thousands)
1. Plan Description
----------------
The Plan* was established by NYNEX Corporation ("NYNEX")on January 1, 1984
to provide a convenient way for salaried employees to save on a regular and
long-term basis. Participants are able to invest in one or more
combinations of the following funds (referred to herein individually as a
"Fund" and collectively as the "Funds"): NYNEX Shares Fund,
Telecommunications Fund, Government Obligations Fund, Diversified Equity
Portfolio, Interest Income Fund, Active U.S. Equity Fund, U.S. Balanced
Fund, Global Balanced Fund, International Equity Fund and U.S. Small Cap
Fund. The Plan also contains an Employee Stock Ownership component ("ESOP")
described below.
Allotments and Contributions
----------------------------
An Eligible Employee may authorize a basic pre-tax or after-tax allotment
from 1% to 6% of Salary. A pre-tax or after-tax supplementary allotment of
not more than 10% of Salary may be authorized by employees electing the
maximum 6% basic allotment. Employing Company matching contributions are
made based upon an amount equal to 66 2/3% of the authorized Basic
After-tax Allotment and 75% of the authorized Basic Pre-Tax Allotment of
each Participating Employee. Such matching contributions on authorized
Basic Pre-tax Allotments are invested only in NYNEX shares and are placed
in an ESOP account within the Plan. Eligible Employees of certain of the
companies which participate in the Plan, and are insignificant to the Plan,
are subject to different rules concerning allotments, company matching
contributions and participation in the ESOP. For a detailed discussion of
these differences, participants should refer to the Plan Document.
Contributions are subject to applicable rules set forth in the Internal
Revenue Code (the "Code") and the regulations thereunder.
Participating Employees are immediately vested in their contributions plus
actual earnings thereon. A Participating Employee shall be vested in
his/her accrued benefit derived from Employing Company contributions and
Employing Company ESOP contributions after completing three years of
service. Non-vested Employing Company contributions which are forfeited are
applied as a credit to reduce subsequent contributions of the Employing
Company. At December 31, 1996, forfeited non-vested accounts were $142.
- ----------
* This and certain other capitalized terms used but not defined herein shall
have their respective meanings as defined in the Plan Prospectus.
16
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
1. Plan Description (Continued)
----------------
Termination Priorities
----------------------
Although it has not expressed intent to do so, in the event that the Plan
is terminated by NYNEX, subject to conditions set forth in the Employee
Retirement Income Security Act of 1974, as amended, the Plan provides that
the net assets shall be distributed to Participating Employees in an amount
equal to their respective vested interests in such assets.
Fund Options
------------
The NYNEX Shares Fund invests primarily in the common stock of NYNEX.
The Telecommunications Fund replaced the Diversified Telephone Portfolio
("DTP") on May 1, 1995. Investment assets in the DTP fund were transferred
from Bankers Trust Company to Mellon Bank, N.A. on May 2, 1995. The Fund's
portfolio was restructured and is now comprised of thirty-two North
American telephone utility and telecommunications companies each with a
minimum market value of approximately $1 billion. Among the thirty-two
companies are the eight companies that comprised the DTP. Unlike the DTP,
the Telecommunications Fund is open to new contributions and allotments and
its earnings are reinvested in the Fund. The Fund is a market weighted
index fund and since May 2, 1995, has been managed by NYNEX Asset
Management Company ("NAMCO").
The Diversified Equity Portfolio invests in an equity index fund which,
since January 3, 1995, has been managed by NAMCO. This Fund is principally
a portfolio of common stocks and is structured and maintained with the
objective of providing investment results which approximate the overall
performance of the common stocks included in the Standard and Poors
Composite Index of 500 stocks.
The Government Obligations Fund invests in a Bankers Trust Company pooled
Short Government Bond Index Fund. This Fund invests primarily in fixed
income securities of the United States Government or any agency thereof
with the objective of providing investment results which approximate the
overall performance of the securities included in the Lehman Brothers Inc.
1 - 3 year Government Index. The Fund is managed by Bankers Trust Company.
The Interest Income Fund, invests primarily in a diversified portfolio of
guaranteed insurance contracts issued by insurance companies ("GICs"). Some
of the assets of the Fund are also invested in pools of asset-backed
securities, corporate bonds, and obligations of the United States
Government and its agencies ("Synthetic Guaranteed Investment Contract").
As an integral part of the purchase of each pool of these investments, a
financial institution agrees to protect the pool, via a wrapper contract,
to the extent its market value and/or interest return fluctuates but not in
the event of a default of any security in the pool. The Plan is exposed to
credit risk in the event of nonperformance by the entities with whom the
contracts are placed. The Plan seeks to minimize credit
17
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
1. Plan Description (Continued)
----------------------------
risk by diversifying among a group of GIC issuers and other financial
institutions which meet certain investment criteria established by NAMCO.
These contracts guarantee (i) a fixed rate of interest for a fixed period
of time or (ii) a fixed rate of interest for a fixed or indefinite period
of time combined with the right to participate in income earned above such
fixed rate. Such interest is not guaranteed by any of the Employing
Companies. The Fund is managed by NAMCO. (For further discussion on this
Fund see Note 2.)
The following five Funds commenced operations on January 3, 1995: U.S.
Balanced Fund, Global Balanced Fund, Active U.S. Equity Fund, International
Equity Fund and U.S. Small Cap Fund. In addition to the Diversified Equity
Portfolio, each of these Funds invests in the assets of unitized investment
advisor account(s) of the NYNEX Master Trust ("Master Trust"), as
designated by NAMCO.
The U.S. Balanced Fund invests in stocks and bonds of U.S. corporations in
a variety of industries. This Fund has invested approximately 60 percent in
stocks with most of the remainder in bonds. As of December 31, 1996, NAMCO
had selected the following unitized investment advisor account(s) of the
Master Trust ("Master Trust pooled accounts") for the Fund: Fidelity
Management Trust Company, Franklin Portfolio Associates, Inc., Miller,
Anderson & Sherrerd, LLP, Palisade Capital Management, L.L.C., Standish,
Ayer & Wood, Inc., State Street Research and Management Company, TCW Asset
Management Company, Trinity Investment Management Corporation and Western
Asset Management Company. Effective January 1, 1997, Wilshire Associates
Incorporated was named as an additional manager. In addition, effective May
1, 1997, the assets previously managed by TCW Asset Management Company were
transferred to Wilshire Associates Incorporated.
The Global Balanced Fund primarily invests in a diversified array of
international capital market stocks and bonds. The Fund has investments in
a variety of developed countries in Europe and the Pacific. The Fund has
invested approximately 65 percent in stocks with most of the remainder in
bonds. The portfolio holdings may include both large and small
capitalization stocks. As of December 31, 1996, NAMCO had selected the
following Master Trust pooled accounts for the Fund: Capital Guardian Trust
Company, Fidelity Management Trust Company, Franklin Portfolio Associates,
Inc., Miller, Anderson & Sherrerd, LLP, Morgan Stanley Asset Management
Inc., Palisade Capital Management, L.L.C., Standish, Ayer & Wood, Inc.,
State Street Global Advisors, State Street Research and Management Company,
TCW Asset Management Company, Trinity Investment Management Corporation,
Western Asset Management Company, and WorldInvest Limited. Effective
January 1, 1997, Wilshire Associates Incorporated was named as an
additional manager. In addition, effective May 1, 1997, the assets
previously managed by TCW Asset Management Company were transferred to
Wilshire Associates Incorporated.
18
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
1. Plan Description (Continued)
----------------------------
The Active U.S. Equity Fund invests primarily in domestic common stocks. As
of December 31, 1996, NAMCO had selected the following Master Trust pooled
accounts for the Fund: Fidelity Management Trust Company, Franklin
Portfolio Associates, Inc., Miller, Anderson & Sherrerd, LLP, Palisade
Capital Management, L.L.C., TCW Asset Management Company and Trinity
Investment Management Corporation. Effective January 1, 1997, Wilshire
Associates Incorporated was named as an additional manager. In addition,
effective May 1, 1997, the assets previously managed by TCW Asset
Management Company were transferred to Wilshire Associates Incorporated.
The International Equity Fund invests in twenty international equity
markets of developed countries in Europe and the Pacific; it has
investments in many industries. The portfolio holdings may include both
large and small capitalization stocks. As of December 31, 1996, NAMCO had
selected Capital Guardian Trust Company, Morgan Stanley Asset Management
Inc. and State Street Global Advisors as the Master Trust pooled accounts
for the Fund.
The U.S. Small Cap Fund invests in the domestic stocks of smaller-sized
companies, generally with market capitalization under $1 billion at the
time of purchase. As of December 31, 1996, NAMCO had selected the following
as the Master Trust pooled accounts for the Fund: Columbus Circle
Investors, Gardner Lewis Asset Management, L.P. and Investment Counselors
of Maryland, Inc. and the Boston Company Asset Management, Inc.
The Master Trust pooled accounts selected as of May 31, 1997, were the same
as those described above.
The ESOP is a leveraged Fund that invests primarily in NYNEX shares. The
ESOP component of the Plan is a stock bonus plan intended to qualify under
Sections 401(a)(4) and 4975(e)(7) of the Code. An employee's Employing
Company ESOP Contribution Account reflects all amounts released from the
ESOP Suspense Account and any additional Employing Company contributions
that were made on and after July 1, 1990 to match the employee's Employee
Basic Pre-Tax Allotments, together with the earnings thereon. The employee
may not withdraw or transfer funds out of the ESOP Fund except for hardship
withdrawals and during certain election periods commencing with the plan
year in which occurs the latest of the (a) employee's attainment of age 55
or (b) completion of 10 years of participation in the Plan. The amounts
allowed to be transferred during any election period are subject to certain
limitations under the terms of the Plan.
The ESOP Suspense Account (the "Unallocated Fund") which is part of the
ESOP Fund consists of NYNEX Shares that were acquired with the proceeds of
an acquisition loan and have not yet been released and allocated to
Participating Employees.
19
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
1. Plan Description (Continued)
----------------------------
Pursuant to the Plan, loans were initially made available to certain
Participating Employees effective January 1, 1987. The amount that a
Participating Employee may borrow is limited by certain factors, including
the Employee's vested interest in the respective Employee's pre-tax
account. Generally, the amount can be no less than $1 and no greater than
$50. An employee may not have more than two loans outstanding. Except under
certain circumstances, the loans provide for periodic repayments over a
period not to exceed five years, at an interest rate determined under the
Plan. Effective September 1, 1993, Participating Employees also may prepay
the entire loan at any time, after the first of the month following the
loan effective date. Loans are collateralized by the Participating
Employee's vested account and are recorded in the Loan Fund. In the event
of a default, all of the Participating Employee's contributions to the Plan
shall be suspended. In addition, the Employees' Benefit Committee (the
"Committee") shall cause the amount of unpaid debt to be deducted from any
interest in, or payment or distribution from, the employee's account,
subject to certain limitations. If the amount of such interest, payment or
distribution is not sufficient to repay the unpaid balance of said debt,
the Committee may exercise the Plan's right, if any, to any non-Plan assets
and to the extent a loan balance remains, take whatever collection action,
including suit, the Committee determines necessary.
During 1995, Bankers Trust Company and Mellon Bank, N.A. were the Trustees
for the Plan. Beginning January 1, 1996, the assets of the Plan, excluding
the ESOP-unallocated account, were transferred to the Master Trust (see
Note 3) for which Mellon Bank, N.A. is the Trustee of all Master Trust
assets. In addition, beginning January 1, 1996, the assets of the
ESOP-unallocated account were transferred to Mellon Bank, N.A., as Trustee,
and are held in a separate Trust.
Wellspring Resources,LLC was the recordkeeper for the Plan during 1996 and
1995.
For a complete description of the Plan, participants should refer to the
Plan Document.
2. Accounting Policies
-------------------
Investments
-----------
The NYNEX Master Pension Trust was established on January 1, 1984, and
through December 31, 1994, it served as the vehicle for the investment of
the assets of two defined benefit pension plans of NYNEX, the NYNEX Pension
Plan and the NYNEX Management Pension Plan. Effective January 1, 1995, the
NYNEX Master Pension Trust was renamed the NYNEX Master Trust ("Master
Trust") and amended to incorporate, in addition to the assets of such
defined benefit pension plans, the following: (1) as of January 1, 1995,
certain of the assets of the Plan and the NYNEX Corporation Savings
20
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
2. Accounting Policies (Continued)
-------------------
and Security Plan (Non-Salaried Employees)(the "Non-Salaried Plan") and (2)
as of January 1, 1996, all of the assets of the Plan and the Non-Salaried
Plan, except for the assets of the ESOP-unallocated account.
Value of Investments Held In the Master Trust (See Note 3)
----------------------------------------------------------
The Trustee of the Master Trust values the investments in the Master Trust
as follows:
Investments in securities traded on national and foreign securities
exchanges are valued by the Trustee at the last reported sale prices on the
last business day of the year or, if no sales were reported on that date,
at the last reported bid prices. Over-the-counter securities and government
obligations are valued at the bid prices or the average of the bid and
asked prices on the last business day of the year from published sources
where available or, if not available, from other sources considered
reliable, generally broker quotes.
The value of each contract with an insurance company or other financial
institution included in the Interest Income Fund is reported at contract
value in the Statements of Net Assets Available for Plan Benefits based
upon the principal then invested in by the Fund plus the interest then
accrued on such principal, which approximates the fair value. In accordance
with Statement of Position 94-4 "Reporting of Investment Contracts held by
Health and Welfare Benefit Plans and Defined Contribution Pension Plans"
and in connection with the fully benefit-responsive investment contracts,
the following information is presented:
(i) The asset weighted crediting interest rate yielded a return of 6.7%
for the year ended December 31, 1996.
(ii) The crediting interest rates ranged from 4.2% to 8.3% at December 31,
1996.
(iii) The fair value, as determined either by discounting future cash flows
or by the market value of the underlying investments, at December 31,
1996 was approximately $712,722.
Forward currency contracts are accounted for as contractual commitments on
a trade date basis and are carried at fair value derived by the Trustee at
the exchange rate prevailing on the last business day of the year. Index
futures contracts are recorded as contractual commitments on a trade-date
basis and are carried at fair value based on the closing index futures
price prevailing on the last business day of the year. Both exchange rates
and index futures prices are readily available from published sources.
Temporary cash investments are stated at redemption value which
approximates fair value.
21
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
2. Accounting Policies (Continued)
-------------------------------
Value of Investments Held Outside of the Master Trust During 1995
-----------------------------------------------------------------
The value of NYNEX shares, throughout the respective Funds, and the value
of the shares of each company in the Telecommunications Fund (DTP for 1994
and through April 28, 1995) are determined on the basis of the closing
price per share as quoted by the New York Stock Exchange Composite
Transactions listing on December 31 or, if no sales were made on that date,
at the closing price on the first preceding day on which sales were made.
The value of the Plan's investment in the pooled Short Government Bond
Index Fund included in the Government Obligations Fund is based on the
pooled fund's respective per share value. The Trustee of the pooled funds
determines per share value based upon fair value of the underlying
securities held by the Funds at December 31.
The value of each contract with an insurance company or other financial
institution included in the Interest Income Fund is reported at contract
value in the Statements of Net Assets Available for Plan Benefits based
upon the principal then invested in by the Fund plus the interest then
accrued on such principal, which approximates the fair value. In Contracts
accordance with Statement of Position 94-4 "Reporting of Investment held
by Health and Welfare Benefit Plans and Defined Contribution Contracts
Pension Plans" and in connection with the fully benefit-responsive
investment contracts, the following information is presented:
(i) The asset weighted crediting interest rate yielded a return of 6.8%
for the year ended December 31, 1995.
(ii) The crediting interest rates ranged from 5.0% to 8.8% at December 31,
1995.
(iii) The fair value, as determined either by discounting future cash flows
or by the market value of the underlying investments, at December 31,
1995 was approximately $811,852.
Purchases and Sales of Investments
----------------------------------
Purchases and sales of investments are reflected as of the trade date.
Realized gains and losses on sales of investments are determined on the
basis of average cost.
Investment Income
-----------------
Dividend income is recorded on the ex-dividend date. Interest earned on
investments is recorded on the accrual basis.
22
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
2. Accounting Policies (Continued)
-------------------
Net Appreciation (Depreciation) of Investments
----------------------------------------------
The Statements of Changes in Net Assets Available for Plan Benefits
reflects the net appreciation (depreciation) in the fair value of the
Plan's investments, which consists of the realized gains or losses and the
unrealized appreciation (depreciation) on those investments.
Distributions
-------------
Distributions elected to be withdrawn from the Plan by participants are
recorded when paid.
Plan Expenses
-------------
Effective January 1, 1993, the Plan pays certain administrative fees out of
Fund assets held in the Master Trust and, effective March 1, 1995, out of
interest income earned from the Plan's disbursement account, as held by the
Trustee, in accordance with Plan provisions and to the extent permitted by
law. Any fees not paid by the Plan are paid by NYNEX.
NYNEX's Use of Estimates
------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires NYNEX, as Plan administrator, to
make significant estimates and assumptions that affect the reported amounts
of net assets available for plan benefits at the date of financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could
differ from those estimates.
Risks and Uncertainties
-----------------------
The Plan provides for various participant investment options in any
combination of funds which can invest in any combination of stocks, bonds,
fixed income securities, mutual funds, and other investment securities.
Investment securities are exposed to various risks, such as interest rate,
market, and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in
the values of investment securities will occur in the near term and that
such changes could materially affect participants' account balances and the
amounts reported in the Statements of Net Assets Available for Plan
Benefits.
23
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
3. Investments
-----------
The following table reflects the investments that represent 5% or more of
the net assets in the Master Trust:
1996 1995
---- ----
NYNEX Corporation common shares $2,220,164 $ --
The following table reflects the investments that represent 5% or more of
the net assets of the Plan held outside of the Master Trust:
1996 1995
---- ----
NYNEX Corporation common shares $ -- $1,002,958
Investment in Master Trust
--------------------------
All of the investment assets in the Master Trust are managed by investment
advisors. The assets in the Master Trust are either (a) pooled between the
defined benefit plans, the Non-Salaried Plan and the Plan, or (b) net
assets that are specific to the defined benefit plans, or (c) for the year
ended December 31, 1996, net assets specific to the Non-Salaried Plan and
the Plan. The total value of the Master Trust at December 31, 1996 and 1995
is $22,282,741 (of which net assets totalling $10,135,399 are specific to
the defined benefit pension plans for which separate financial statements
are prepared; and as of the date of these financial statements 35% of the
defined benefit pension plans' net assets are unaudited) and $20,951,623
respectively.
Investments held in Pooled Accounts:
------------------------------------
The pooled investments are unitized, aggregated and reported by the Master
Trust with a carrying value of $8,107,361 and $4,340,668 at December 31,
1996 and 1995, respectively, and with investment earnings of $1,253,840 and
$1,741,698 for the years ended December 31, 1996 and 1995 respectively.
Given that the pooled accounts include interests of the Plan, the
Non-Salaried Plan and the defined benefit plans, the totals in each
respective statement does not equal the carrying value or net investment
income of/from the Master Trust pooled accounts in this accompanying
footnote.
24
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
3. Investments (Continued)
-----------
The investments held in the Master Trust pooled accounts at December 31,
1996 and 1995 are as follows:
Fair Value (Note 2)
--------------------
1996 1995
---- ----
Description
-----------
Cash - non interest bearing $ 57 $ --
Receivables 512,740 17,386
Common Stock 6,342,696 3,173,098
NYNEX Corporation common shares 25,577 16,679
Preferred Stock 56,156 8,938
U.S. Government Securities 680,805 328,728
Corporate Debt - preferred and other 429,302 264,296
Real estate 65 --
Temporary cash investments 346,004 273,328
Forward currency sell contracts -- 151,124
Other investments* 259,666 310,098
---------- ----------
8,653,068 4,543,675
Liabilities 545,707 203,007
---------- ----------
Total pooled net assets
in the Master Trust $8,107,361 $4,340,668
========== ==========
* Other investments include foreign investments, principally foreign
government debt.
The Plan's interests in the Master Trust pooled accounts carrying value and
investment income of the Master Trust pooled accounts are reported in each
respective Fund Option as the "Allocated share of Master Trust net assets"
in 1996 and "Value of the Plan's participation in the Master Trust" in 1995
in the Statement of Net Assets Available for Plan Benefits and "Allocated
share of Master Trust investment activities" in the Statements of Changes
in Net Assets Available for Plan Benefits as of December 31, 1996 and 1995,
respectively.
For the year ended December 31, 1995, the Plan's sole investment in the
Master Trust is its Fund Options' undivided interest in the Master Trust
pooled accounts. Investments are allocated to the Plan's Fund Options in
accordance with their respective percentages of interest.
25
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
3. Investments (Continued)
-----------
The proportionate interests of the Plan's Fund Options in the carrying
value of the Master Trust pooled accounts at December 31, 1996 and 1995 are
as follows:
1996 1995
---- ----
Active U.S. Equity Fund 0.7132% 0.7403%
U.S. Balanced Fund 0.4602% 0.5557%
Global Balanced Fund 0.4370% 0.4586%
International Equity Fund 0.4113% 0.5069%
U.S. Small Cap Fund 0.5489% 0.6450%
Diversified Equity Portfolio 9.4782% 13.7413%
Investments Held in Specific Accounts for the Plan and the Non-Salaried
-----------------------------------------------------------------------
Plan:
-----
Effective January 1, 1996, all of the assets of the Plan and the
Non-Salaried Plan were transferred into the Master Trust. As such, the net
assets specific to these plans are the NYNEX Shares Fund,
Telecommunications Fund, Government Obligations Fund, Interest Income Fund,
Loan Fund and the ESOP allocated account.
The investments held in the Master Trust specific accounts for the Plan and
the Non-Salaried Plan at December 31, 1996 are as follows:
Fair Value
Description (Note 2)
----------- ----------
Cash - non interest bearing $ 40
Receivables 226,323
Common Stock 272,663
NYNEX Corporation common shares 2,194,587
Temporary cash investments 120,880
Fixed income obligations - insurance contracts 1,104,453
Other investments 121,035
----------
Total net assets in the specific
accounts in the Master Trust $4,039,981
==========
26
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
3. Investments (Continued)
-----------
Investments are allocated to the Plan's Fund Options in accordance with
their respective percentages of interest. The proportionate interests of
the Plan and the Non-Salaried Plan in the carrying value of the Master
Trust specific accounts at December 31, 1996 are as follows:
Plan Non-Salaried
Plan
NYNEX Shares Fund 32.8531% 67.1469%
Telecommunications Fund 53.3069% 46.6931%
Government Obligations Fund 95.2503% 4.7497%
Interest Income Fund 63.2401% 36.7599%
Loan Fund 44.0940% 55.9060%
Employee Stock Ownership Plan 100.0000% --
27
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
3. Investments (Continued)
-----------
Investment Income:
------------------
Investment income and expenses are allocated to the Plan's Fund Options
daily in accordance with their respective daily percentages of interest in
the Master Trust's pooled accounts. Percentages of interest are based on
the daily ratio of units owned by each Plan's Fund Options to the total
units in the Master Trust pooled accounts. Investment income related to
investments held in specific accounts for the Plan and the Non-Salaried
Plan is allocated to the Plan's Fund Options daily in accordance with each
Plan's respective percentage of interest. The allocated net investment
income to the Plan's Fund Options for the years ended December 31, 1996
and 1995 is as follows:
Description
-----------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Dividends on Net
NYNEX Corporation Other Net appreciation Other income/ Investment
Interest common shares Dividends (depreciation) expenses-net Income
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1996:
- ------------------
NYNEX Shares Fund $ 27 $31,651 $ -- $ (83,861) $ -- $ (52,183)
Telecommunications Fund -- -- 4,955 (2,885) -- 2,070
Government Obligations Fund -- -- -- 4,324 -- 4,324
Diversified Equity Portfolio 4,273 -- 12,774 147,803 (32) 164,818
Interest Income Fund 52,722 -- -- (2,187) -- 50,535
Loan Fund 5,854 -- -- -- -- 5,854
Employee Stock Ownership Plan-Allocated 6 13,223 -- (31,133) -- (17,904)
Employee Stock Ownership Plan-Unallocated* -- 19,810 -- (41,117) -- (21,307)
Active U.S. Equity Fund 88 -- 906 8,319 (1) 9,312
U.S. Balanced Fund 755 -- 432 3,512 (2) 4,697
Global Balanced Fund 522 -- 406 3,382 (10) 4,300
International Equity Fund 45 -- 577 3,001 (61) 3,562
U.S. Small Cap Fund 161 -- 304 6,956 -- 7,421
*Held in a separate Trust (see Note 1)
</TABLE>
28
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
3. Investments (Continued)
-----------
Investement Income:
Description
-----------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Dividends on Net
NYNEX Corporation Other Net appreciation Other income/ Investment
Interest common shares Dividends (depreciation) expenses-net Income
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1995:
- ------------------
Active U.S. Equity Fund $ 3 $ 426 $-- $ 5,398 $-- $ 5,827
U.S. Balanced Fund 273 201 -- 2,933 3 3,410
Global Balanced Fund 358 176 -- 2,638 13 3,185
International Equity Fund 18 335 -- 1,058 1 1,412
U.S. Small Cap Fund 74 174 -- 2,268 -- 2,516
Diversified Equity Portfolio 4,882 10,710 -- 140,320 5 155,917
</TABLE>
29
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
4. Derivative Financial Instruments
--------------------------------
Derivative financial instruments are used in the Master Trust's pooled
accounts primarily to rebalance fixed income/equity allocations, to
efficiently gain exposure to a specific underlying market, and to offset
the currency risk associated with foreign investments. Leveraging of the
Plan's assets and speculation are prohibited as stated in the Plan
documents. Offsetting currency positions are not permitted to exceed the
level of exposure in the Plan's foreign asset base. The derivatives most
commonly used by investment managers are highly-liquid, exchange-traded
equity and fixed income futures and over-the-counter foreign exchange
forward contracts.
NYNEX's use of financial instruments for risk management purposes is
represented by notional amounts. These notional values represent solely
contractual amounts that serve as the basis or reference amounts upon which
contractually stipulated calculations are based. Therefore, these amounts
are intended to serve as general volume indicators only and do not
represent the potential gain or loss from market or credit risks.
Market risk arises from the potential for changes in the value of financial
instruments resulting from fluctuations in interest rates, foreign exchange
rates and prices of equity securities. Market risk is also affected by
changes in volatility and liquidity in the markets in which these
instruments are traded.
Equity price risk arises from the possibility that equity prices will
fluctuate, affecting the value of equity securities and derivative
financial instruments that derive their value from a stock index, a
particular stock or a defined basket of stocks.
The credit risk and amount of accounting loss of the Plan's forward
contracts is equal to any gains which have not yet settled as of the Plan's
year end. The credit risk of the Plan's futures contracts is equal to the
posted margin plus any unsettled positive variation margin. The amount of
accounting loss at year end is equal to any variation margin owed to the
Plan.
All derivative activity relating to the Plan is within the Master Trust
pooled accounts. The Master Trust pooled accounts' derivative activity is
allocated to the Plan in accordance with the Plan's Fund Options'
respective percentages of interest (see Note 3). The following disclosures
regarding the notional values, fair values, average with fair values and
net trading gains are reported per the Plan.
30
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
4. Derivative Financial Instruments (continued)
--------------------------------
The notional values and fair values of the derivative activity used for
trading purposes held by the Plan at December 31, are as follows:
1996 1995
---- ----
Domestic Equity Futures Contracts:
Notional Values $1,818 $14,022
Fair Values 1,835 13,364
Fixed Income Futures Contracts:
Notional Values 237 169
Fair Values 236 170
Forward Foreign Currency Payable Contracts:
Notional Values 521 --
Fair Values 510 --
Forward Foreign Currency Receivable Contracts:
Notional Values 523 --
Fair Values 518 --
The average fair values of the derivative activity used for trading
purposes held by the Plan during the year ended December 31, are as
follows:
1996 1995
---- ----
Average Fair Values:
Domestic Equity Futures Contracts $15,167 $32,732
Fixed Income Futures Contracts 229 133
Forward Foreign Currency
Payable Contracts 650 --
Forward Foreign Currency
Receivable Contracts 648 --
The Plan was allocated $2,622 and $10,109 in 1996 and 1995, respectively,
of net trading gains from futures contracts. Net trading gains from foreign
exchange contracts totalled $124 in 1996.
31
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
5. Number and Value of Units
-------------------------
The interest of an employee in each Fund of the Plan, with the exception of
the Loan Fund, is represented by units as described in Section 8 of the
Plan. A Participant's unit value is determined daily by dividing each
Fund's adjusted net assets, as defined in the Plan, by the number of
outstanding units.
The number and value of units at each month end in 1996, which are all
unaudited except at December 31, 1996 and 1995, carried to the fourth
decimal place, were as follows:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------- -----------------
Number Value Number Value
of Units per Unit of Units per Unit
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NYNEX Shares Fund 96,597,286 $ 6.4478 103,411,902 $ 6.8871
Telecommunications Fund 10,158,751 15.3482 11,260,222 14.9168
Government Obligations Fund 12,352,919 9.4353 14,314,312 8.9858
Diversified Equity Portfolio 43,548,894 17.6452 41,590,681 14.3413
Interest Income Fund 156,221,942 5.0313 173,299,772 4.7172
Employee Stock Ownership Plan 165,580,211 1.7615 152,926,708 1.8832
Active U.S. Equity Fund 34,634,466 1.6694 23,635,232 1.3595
U.S. Balanced Fund 25,019,740 1.4912 18,615,462 1.2958
Global Balanced Fund 24,143,457 1.4674 15,586,008 1.2772
International Equity Fund 27,295,545 1.2217 20,236,160 1.0873
U.S. Small Cap Fund 28,819,185 1.5441 21,938,069 1.2762
</TABLE>
32
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
<TABLE>
<CAPTION>
NYNEX Shares Fund Telecommunications Fund Government Obligations Fund Diversified Equity Portfolio
----------------- ----------------------- --------------------------- ----------------------------
Number Value Number Value Number Value Number Value
1996 of Units Per Unit of Units Per Unit of Units Per Unit of Units Per Unit
- ---- -------- -------- -------- -------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 103,992,453 6.9121 11,364,690 15.2449 14,035,992 9.0555 42,002,122 14.8508
February 105,081,899 6.6380 11,568,852 14.7419 13,917,170 9.0216 42,342,910 14.9862
March 106,296,908 6.4292 11,459,388 14.5676 13,692,047 9.0098 42,675,474 15.1281
April 107,803,016 6.4095 11,328,029 14.9809 13,434,039 9.0193 42,673,371 15.3354
May 105,928,666 6.0211 11,190,460 14.9287 13,119,905 9.0393 43,045,829 15.7230
June 105,304,903 6.1989 11,186,876 15.0506 12,965,892 9.1007 43,125,157 15.7904
July 104,544,671 5.9344 11,090,376 13.8973 12,916,483 9.1411 42,795,002 15.0901
August 103,463,703 5.7032 11,092,607 13.6145 12,763,987 9.1714 43,154,554 15.3981
September 102,355,878 5.7525 11,002,845 13.8015 12,636,652 9.2503 43,267,696 16.2574
October 100,751,732 5.9608 10,714,227 14.0828 12,515,273 9.3526 43,798,198 16.7075
November 98,474,161 6.2094 10,430,765 14.9440 12,401,631 9.4215 44,019,631 17.9745
<CAPTION>
Interest Income Fund Employee Stock Ownership Plan - Allocated Active U.S. Equity Fund
-------------------- ----------------------------------------- -----------------------
Number Value Number Value Number Value
1996 of Units Per Unit of Units Per Unit of Units Per Unit
---- -------- -------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
January 167,018,492 4.7418 153,383,613 1.8890 25,181,034 1.4030
February 161,607,581 4.7680 154,362,725 1.8141 26,204,651 1.4253
March 160,319,587 4.7909 157,520,880 1.7564 27,274,839 1.4330
April 156,619,012 4.8177 158,399,369 1.7505 27,745,340 1.4489
May 154,448,673 4.8435 159,507,932 1.6437 29,839,204 1.4834
June 153,824,862 4.8689 160,050,263 1.6927 31,103,139 1.4776
July 154,811,345 4.8949 160,956,755 1.6202 30,821,613 1.4117
August 153,829,863 4.9211 162,158,570 1.5568 31,523,020 1.4478
September 154,222,042 4.9494 163,239,972 1.5703 31,776,183 1.5229
October 153,463,741 4.9765 164,173,618 1.6278 32,808,434 1.5724
November 153,947,162 5.0020 164,934,207 1.6959 34,313,792 1.6782
<CAPTION>
U.S. Balanced Fund Global Balanced Fund International Equity Fund U.S. Small Cap Fund
------------------ -------------------- ------------------------- -----------------------
Number Value Number Value Number Value Number Value
1996 of Units Per Unit of Units Per Unit of Units Per Unit of Units Per Unit
- ---- -------- -------- -------- -------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 20,482,064 1.3261 16,824,674 1.2980 22,375,955 1.0911 22,088,152 1.2402
February 21,117,973 1.3295 17,819,358 1.3045 22,725,906 1.0981 22,277,612 1.2751
March 21,900,529 1.3285 18,495,841 1.3068 22,959,532 1.1123 23,236,668 1.3022
April 21,744,972 1.3364 18,984,200 1.3213 23,978,003 1.1526 25,171,546 1.4164
May 22,963,486 1.3564 20,187,286 1.3406 24,948,731 1.1534 29,114,535 1.4612
June 22,887,698 1.3591 20,366,143 1.3433 25,023,840 1.1612 29,510,737 1.3919
July 22,475,730 1.3205 20,470,202 1.3028 24,845,220 1.1242 29,172,277 1.2975
August 23,353,216 1.3387 21,165,417 1.3222 25,307,886 1.1374 29,035,895 1.3694
September 23,888,716 1.3940 21,508,080 1.3748 25,392,148 1.1657 28,621,781 1.4309
October 24,114,742 1.4367 22,403,540 1.4102 25,583,724 1.1638 28,056,841 1.4295
November 24,962,482 1.5708 23,571,868 1.4814 26,548,312 1.2184 27,725,299 1.4989
</TABLE>
33
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
6. Federal Income Taxes
--------------------
The Internal Revenue Service has determined and informed NYNEX by a letter
dated October 12, 1995, that the Plan, as submitted, is qualified and the
Master Trust established under the Plan is tax-exempt, under the
appropriate sections of the Code. The Plan has been amended since receiving
the determination letter. However, the Plan administrator and the Plan's
tax counsel believe that the Plan is currently designed and being operated
in compliance with the applicable requirements of the Code. Therefore, they
believe that the Plan was qualified and the related Master Trust was
tax-exempt as of the date of the financial statements.
7. Indebtedness
------------
During 1990, pursuant to the NYNEX Employee Stock Ownership Trust, the ESOP
Trust issued a Secured Promissory Note of $449,297 to NYNEX for the purpose
of purchasing shares of common stock of NYNEX. The Secured Promissory Note
is collateralized by all shares of common stock of NYNEX acquired by the
ESOP Trust. The borrowings bear interest at 9.778% and have maturities from
February 1, 1996 through February 1, 2015. Principal amounts of $14,625,
$15,807, $16,912, $17,949, and $18,926 will be payable from 1997 to 2001,
respectively. Employing Company supplemental contributions to the ESOP Fund
and dividends earned on unallocated and allocated shares for 1996 of
$26,530, $19,810, and $5,504 and for 1995 of $25,887, $15,641 and $3,735,
respectively, were used to pay principal and interest on the debt. Interest
credits earned from principal prepayments were used to pay interest on the
debt of $2,311 and $2,669 in 1996, and 1995, respectively. The fair value
of the Note, $398,501 at December 31, 1996, is determined based on
discounted future cash flows.
8. Related Party Transactions
--------------------------
NAMCO, a wholly owned subsidiary of NYNEX, is the investment advisor for
the Telecommunications Fund, Diversified Equity Portfolio and Interest
Income Fund and therefore qualifies as a party-in-interest. NAMCO received
no compensation from the Plan for the investment advisory services rendered
to the Plan.
9. Concentrations of Credit Risk
-----------------------------
Financial instruments which potentially subject the Plan to concentrations
of credit risk consist principally of investment contracts with insurance
companies and other financial institutions.
The Plan places its investment contracts with high-credit quality insurance
companies and financial institutions in order to limit credit exposure.
10. Plan Amendments
---------------
Effective January 1, 1996, the Plan was changed to expand the "deemed"
hardship withdrawals to include payment of room and board expenses for
post-secondary education.
34
<PAGE>
NYNEX CORPORATION SAVINGS PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS (Continued)
(Dollars in Thousands)
10. Plan Amendments (Continued)
---------------------------
On April 1, 1997, the Plan was amended to provide that certain employees
who are plan participants and who are involuntarily terminated in
connection with the merger of NYNEX Corporation and Bell Atlantic
Corporation would be fully vested in their accrued benefit derived from
Employing Company Contributions and Employing Company ESOP Contributions.
11. Reconciliation of Financial Statements in Form 11-K to Form 5500
----------------------------------------------------------------
The Department of Labor requires that amounts allocated to accounts of
persons who have elected to withdraw from the Plan but have not yet been
paid be reported as liabilities on the Plan's Form 5500. In accordance with
the relevant American Institute of Certified Public Accountants audit and
accounting guide, benefit amounts should not be accrued as liabilities of
the Plan. The following is a reconciliation of distributions to
participants and net assets available for Plan benefits in the financial
statements to the amounts reported in Form 5500.
December 31,
1996 1995
---- ----
Aggregate distributions to participants
as presented in the Statement of Changes
in Net Assets Available for Plan benefits $ 208,528 $ 198,884
Add: Current year benefits claims payable
presented in the Statement of Net Assets
Available for Plan Benefits in Form 5500
(see Note 2) 2,343 681
Less: Prior year benefits claims payable
presented in the Statement of Net Assets
Available for Plan Benefits in Form 5500
(see Note 2) 681 670
--------- ----------
Benefit payments and payments to provide
benefits directly to Participants and
beneficiaries presented in the Statement
of Changes in Net Assets Available for
Plan Benefits in Form 5500 $ 210,190 $ 198,895
========== ==========
Net assets available for Plan benefits
presented in the Statement of Net Assets
Available for Plan Benefits 3,025,093 2,962,993
Less: Benefits claims payable presented
in the Statement of Net Assets Available
for Plan Benefits in Form 5500 (see Note 2) 2,343 681
---------- ----------
Net assets available for Plan Benefits
presented in the Statement of Net Assets
Available for Plan Benefits in Form 5500 $3,022,750 $2,962,312
========== ==========
35
<PAGE>
Exhibit (23)
CONSENT OF INDEPENDENT ACCOUNTANTS
---------------------
We consent to the incorporation by reference in the registration statements on
Form S-8 (File Nos. 33-53477, 33-21635, 2-95634, and 2-95780) of NYNEX
Corporation of our reports dated June 20, 1997, on our audits of the financial
statements of the NYNEX Corporation Savings Plan for Salaried Employees as of
December 31, 1996 and 1995, and for each of the two years in the period ended
December 31, 1996 which is included in the Annual Report on Form 11-K for the
above referenced Plan filed, by amendment, to the Annual Report on Form 10-K of
NYNEX Corporation for the year ended December 31, 1996.
COOPERS & LYBRAND L.L.P.
New York, New York
June 24, 1997
36
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Savings
Plan Committee of NYNEX Corporation has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
NYNEX CORPORATION SAVINGS
PLAN FOR SALARIED EMPLOYEES
/s/ By D.J. Sacco
-------------------------------
(D. J. Sacco, Chairman,
Employees' Benefit Committee)
Date: June 26, 1997
37
